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IOWA HEALTH CARE EXECUTIVE IOWA HEALTH CARE EXECUTIVE IOWA HEALTH CARE EXECUTIVE IOWA HEALTH CARE EXECUTIVE
SYMPOSIUMSYMPOSIUMSYMPOSIUMSYMPOSIUMOCTOBER 31, 2014OCTOBER 31, 2014OCTOBER 31, 2014OCTOBER 31, 2014
Health Care Policy Impacts and Updates
Succeeding in an Era of Accountable Care
1
Presentation Outline
Joe LeValley, Senior VP, Mercy Health Network� Mercy “Snapshot”� The Health Care Environment – Drivers of Change� The Affordable Care Act Summarized� Mercy’s Three-Part Strategy� Early Results
Brad Wright, PhD, Assistant Professor, Department of Health Management & Policy, College of Public Health, University of Iowa� What We Know,
What We Don’t Know, and What We Think We Know About the Affordable Care Act
2
MERCY “SNAPSHOT”MERCY “SNAPSHOT”MERCY “SNAPSHOT”MERCY “SNAPSHOT”
3
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• Founded by Sisters of Mercy in 1893– Longest continually operating hospital
in Des Moines• 827 licensed beds, 674 Staffed beds• On 3 Campuses:
– Mercy Medical Center – DM (622 tertiary & 34 Behavioral Health beds)
– Mercy – West Lakes (146 beds)– Mercy – Centerville (25 CAH beds)
• Largest medical center in Iowa• One of the largest multi-specialty
physician group practices in Iowa• Fully-accredited 4-year college & 3
physician residency programs• Comprehensive senior services incl.
Bishop Drumm Retirement Center• Winner of regional and national
awards for quality, diversity, wellness and care management
Annual Statistics* – FY2014
Total Acute Admissions 30,412
Outpatient Visits 268,645
Surgeries (Procedures) 20,739
Visits to Mercy Clinics 1,208,819
Payroll & Benefits $477 million
Total Net Patient Revenues $843 million
Total Employees 7,100
*Does not include Mercy – Centerville
Mercy Medical Center – Des Moines Snapshot
Bishop Drumm (Nursing Home/SNF)
PatientGuest
PartnerCustomer
Mercy
Clinics
(Primary & Specialty
Care)
House of Mercy
Home Care / DME / Pharmacy
Physical Therapy and Rehabilitation
Iowa Heart Center
Mercy Hospice
Mercy Foundation
15 Managed Community
Hospitals (CAHs)
Martina Place (Assisted Living)
3 Hospitals (Central, West Lakes, Centerville)
Revised: 6.12.2014
Mercy is Comprised of…
Mercy Auxiliary
Behavioral Health
Mercy College
Revenue Supported
Mission Based
Education
Volunteers
Graduate Medical Education
(Family Medicine, Internal Medicine, Surgery)
5
6
Medical Staff Development • Net gain of 165 Active Staff from 2004 to 2014
Source: Medical Staff Office, 8/2014
456 473 487515 522 539 554 564 577 594
621
0
100
200
300
400
500
600
700
7
Employee Engagement - Culture of Health• Honors and Recognitions
– Platinum Well Workplace Award from the Wellness Council of America. One of 5 organizations in the U.S. to have achieved this designation in 2012. Since its inception in 2001, less than 50 organizations in the nation have received the Platinum Well Workplace Award.
– Gold Level Recipient Fit-Friendly recognition from the American Heart Association
• Wellness Activities– WOW4-U Employee Wellness Program– Lunch and Learns on Wellness/disease topics– In-hospital Wellness Center on Central Campus– Free health screenings providing risk factors identification– Nicotine-free hiring policy for all job applicants at hospitals,
clinics, outpatient centers and all other facilities– Healthy Spirit program– Healthy Living Center / employee discounts to all YMCAs
8
Healthy Living Center
• Partnership between Mercy & YMCA of Greater Des Moines• Located on the Mercy Wellness Campus, Clive • “Bridge” between healthcare and fitness• More than 300 physicians have referred patients there • Over 3,000 Mercy employees and their family members
purchase memberships through the Mercy discount• Visitors from all across the nation
15
9
Employee Awards / Recognitions• Awards for employees too numerous to list, but including Top 100
Nurses, Heroes of the Heartland, 40 Under 40 Leaders, Women of Influence and others
• CEO Dave Vellinga voted Best CEO in Des Moines for 4th consecutive year by readers of the Business Record
Initiatives:• Mercy-wide Diversity Committee created in 1999 • Full-time Director of Diversity and Community Services - 2002 • Many educational programs, celebrations, other activitiesCommunity Participation• Greater DM Partnership Diversity Council• Asian Alliance• NAACP • Iowa Civil Rights CommissionRecognitions:• 2014 – “Best in Class” hospital as part of “Diversity and Disparities: A
Benchmarking Study of U.S. Hospitals”.
Commitment To Diversity
Clinical Excellence in …
10
• Emergency / Trauma – Busiest in Iowa, 2 medical helicopters • Cardiovascular – Market leader, largest in Iowa• Children’s Hospital & Clinics – Comprehensive services, only pediatric
heart program and several other specialties• Maternal / Child – Market leader, Level III NICU• Cancer – National Cancer Institute NCCCP, CyberKnife• Orthopedics / Rehabilitation – “Joint Camp,” Inpatient & Outpatient Rehab• Neuroscience – Largest neurology group in Iowa, National MS Center,
neurosurgery, neuroradiology• Surgery – Two inpatient and four outpatient centers• Women’s Services – Katzmann Breast Center• Senior Services – continuum of care on Johnston campus• Behavioral Health – 34-bed facility adult & child; intensive outpatient
adolescent substance abuse program, 24-hour Help Center• Imaging / Diagnostics – largest & most specialized radiology group • Home Care – Consolidated Health Services (CHS)• Hospice – outpatient and inpatient facility• Clinics – Family Practice, Urgent Care, “Quick Care” and
multiple specialties and sub-specialties
11
Mercy West Lakes
Mercy Central Campus
Three Hospital Campuses
Mercy Centerville
12
Mercy – West Lakes• Opened September 2009• First hospital in Iowa to achieve LEED
(Leadership in Energy and Environmental Design) certification
• Brings expert health care to a convenient west-side location. Services include:– Birthing Services – A Cardiac Catheterization Lab – Inpatient and outpatient surgical services – Inpatient medical/surgical beds – Diagnostic and ancillary services
• Senior Emergency Department 24/7– All ED nurses have received Geriatric
Emergency Nursing Education (GENE) training
– Only ED in central Iowa to provide this level of nursing expertise for older adults
13
A Teaching HospitalMedical Education
Residency ProgramsFamily Practice Residency
• 24 residents• 22,000 square-foot facility
General Surgery Residency• 20 residents
Internal Medicine Residency• 20 residents
Undergraduate Medical Education – 60 Contracts with Colleges
• 3rd Year Medical Students• 3rd Year Core Rotations• 4th Year Medical Students• 3rd Year OB/GYN Clerkship
Continuing Medical Education• 12 to 15 CME programs per month
14
Mercy College of Health Sciences • Fully-Accredited 4-Year College• Nearly 900 Students • Offers the following programs:
– Nurses & Nursing Assistants– BA in Health Care Administration– Nuclear Medicine Technologists– Emergency Medical Techs/Paramedics– Medical Assistants– Medical Billing & Coding Assistants– Medical & Health Service Managers– Pharmacy Technicians– Physical Therapist Assistants– Polysomnographic (Sleep) Technicians– Radiologic Technicians– Sonographers– Surgical Technologists
• First “Paramedic to RN” program in Iowa• Largest educator of undergraduate nurses in Iowa• Distance learning program with CHI• First Year Candidate Licensure and Certification
Pass Rates – 3 Year Average ASN – 89%
15
• Housing & services for women, children & parenting adolescents (nearly 500 total residents in FY13)
• Chemical Dependency Treatment• Trauma and mental health counseling services• Parenting education, assistance and support• Skill development in communications, nutrition, and
basic life skills• Employment and education counseling/support• John R. Grubb Child Development Center• Nursing and social work support to four Diocesan
schools• Outreach services to area homeless shelters• Transitional housing• Outstanding success stories• Satellite locations in Newton and Indianola
Mission / Community BenefitsHouse of Mercy
16
Mission / Community Benefits
Yucatan Heart Program• Partnership with American Airlines and Variety International• Mercy Donates all hospital services and teams that go to Mexico• Physicians donate their time there, and when they return here – to
perform the surgeries and recheck patients.• 20 to 30 children come here for surgery each year.• 950+ children have been helped since 1979• Dr. Thomas Becker received a Variety International award in spring of
2005 for his work with the program. • Mexico partner: Hospital O’Horan
17
Total Community Benefits – FY14
Charity Care (actual cost of services provided & not billed) $9.99 million
Support for the poor & community and other (House of Mercy, Education, Research, etc.)
$9.50 million
Unpaid cost of Medicaid $28.98 million
Community Benefit TOTAL $48.47 million
Unpaid costs of caring for Medicare patients $73.60 million
Cost of Uncompensated Services TOTAL $122.07 million
Bad Debt $42.60 million
GRAND TOTAL $164.67 million
Mission / Community Involvement
Notes: 8.5.14 Mercy Finance
18Sources: 1) CHI,Trinity Websites 2) MHN records 3) IHA Dimensions- FY14. Excludes behavioral health, chemical dependency, and skilled nursing 4) IHA Profiles- FY12
Mercy-Dubuque (2)
Mercy-Sioux City (3) Mercy-North Iowa (2)
Mercy-Clinton
Mercy-Des Moines (3)
� Joint Operating Agreement of two national sponsors: CHI Health & CHE Trinity
� Iowa organizations function as one integrated organization
� 11 owned hospitals: 6 urban; 5 rural community2
� 1 joint venture surgical hospital2
� 26 affiliated community hospitals2
� 646 employed physicians2
� 24.9% share of inpatient & observation discharges in Iowa 3
� 2,780 licensed beds (excludes nursing home)4
� 76,354 Discharges3
� 827,317 outpatient visits3
� 14,239 employees2
� $1.94 billion in total annual operating revenues4
Mercy Health Network
19
Affiliated Hospitals (26)
Manning Regional Healthcare Center
Mount Ayr
Audubon County Memorial Hospital
Adair County Memorial Hospital
Des Moines
Manning
Greenfield
Wayne County Hospital
Webster City
Audubon
Albia
Corydon Centerville
Van Diest Medical Center
Monroe County Hospital
Bloomfield
Davis County Hospital
Mercy Medical Center-DM
Mercy Medical Center- Centerville
Madison County Health Care SystemWinterset
Leon
Decatur County Hospital
Ringgold County Hospital
Owned Medical Centers / Hospitals (11)
Revised 9/14
Boone CountyHospital
Boone
Mercy Medical Center – Sioux City
Mercy Medical –Center Dubuque
Mercy Medical Center-North Iowa
Mercy Medical Center – Clinton
Mason CityHawarden
Primgahr
Emmetsburg Algona Britt
OsageCresco
New Hampton
Hampton
Pender, NE
Oakland, NE
Elkader
Dyersville
Iowa Falls
Hawarden Regional Healthcare
Baum-Harmon Mercy HospitalPalo Alto Co. Health System
Kossuth Regional Health Center
Hancock Co. Health System
Regional Health Services of Howard Co.
Mercy Medical Center –New Hampton Central Community Hospital
Franklin General Hospital
Mitchell Co. Regional Health Center
Dubuque
Clinton
Oelwein
Sioux City
Oakland Mercy Hospital
Pender Community Hospital
Mercy West Lakes
Physician Clinics (146)
36
7
2 10
Ellsworth Municipal Hospital
Mercy Medical Center – Dyersville .
Onawa
Burgess Health Center
Crawford CountyMemorial Hospital
Denison
Dallas County Hospital
Grinnell Regional Medical Center
2
Fort Dodge
Council BluffsKnoxville
Knoxville Hospital and Clinics
5
3
3
Ottumwa2
19
The UI Health Alliance Provides Statewide Coverage for Insurance Networks and Clinical Services
Alegent Creighton
THE HEALTH CARE ENVIRONMENTTHE HEALTH CARE ENVIRONMENTTHE HEALTH CARE ENVIRONMENTTHE HEALTH CARE ENVIRONMENT
---- DRIVERS OF CHANGEDRIVERS OF CHANGEDRIVERS OF CHANGEDRIVERS OF CHANGE
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� Rapidly declining inpatient business : Fueled by rising costs, a soft economy, new technologies, population health management and other factors, inpatient utilization is declining, and outpatient is rising at a slower pace than in the past
� Concentration of commercial insurance . Iowa has the third highest concentration of commercial insurance in the nation.
� Government underpayments . Underpayments from Medicare and Medicaid are common across the country, but are far worse in Iowa –consistently one of the three lowest-paid states in the nation.
� Rapid adoption of value-based payment systems . Many providers in Iowa already are participating with Medicare, Wellmark and the Co-Op in shared savings payment programs. In addition, Iowa Medicaid and other smaller insurance plans are preparing to move to similar arrangements. Fee for service payments quickly are becoming a thing of the past.
� Consolidation of Providers : Most hospitals are part of, or contemplating joining, one of the State’s two large systems. Most physicians also are in these two systems, or in a handful of large multi-specialty groups.
Iowa-Specific Market Characteristics
Past Cost Trends Not Sustainable
23
International Comparison of Spending on Health, 198 0–2010
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
US
SWIZ
NETH
CAN
GER
FR
AUS
UK
JPN
Average spending on healthper capita ($US PPP)
0
2
4
6
8
10
12
14
16
18
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
USNETHFRGERCANSWIZUKJPNAUS
Total health expenditures aspercent of GDP
Notes: PPP = purchasing power parity; GDP = gross domestic product.Source: Commonwealth Fund, based on OECD Health Data 2012.
23
As the Baby-Boomers “BOOM” the Growth in Demand Could Overwhelm Our Capabilities and Our Finances – Unless We Reduce Demand and
Deliver Care Differently
Source: U.S. Census Bureau
0
10
20
30
40
50
60
70
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Baby-Boomers in Millions
From 5
million to 60
million in 16
years!
+ 8,000 to 10,000 new
Medicare Recipients
Every DAY
24
Rising Costs Not Sustainable for Government – Or Taxpayers
Medicare Expenditures Projected to Reach $1.2
TRILLION in 8 Years
In Millions
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total Expenditure
Source: Medicare Trust Fund 2013 Annual Report 25
This is HALF WAY to the Peak in 2030
©2014 The Advisory Board Company • advisory.com • 28601A
26
Medicare Payment Cuts Becoming the Norm
Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012; CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011; CBO,“Bipartisan Budget Act of 2013,” December 11, 2013, all available at: www.cbo.gov; Health Care Advisory Board interviews and analysis.
1) Includes hospital, skilled nursing facility, hospice, and home health services; excludes physician services.
2) Disproportionate Share Hospital.
Public-Payer Reimbursement Already a Prime Target
($4B)($14B)
($21B)($25B)($32B)
($42B)($53B)
($64B)($75B)
($86B)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Medicare Fee-for-Service Payment Cuts
$422 B in total fee-for-service cuts, 2013-2022
$260BHospital payment
rate cuts, 2013-2022
$56BReduced Medicare and Medicaid DSH2
payments, 2013-2022
$151BReduced Medicare payments
due to sequestration and 2013 budget bill
Not Sustainable for Hospitals – Lose $ on Medicare Fee -for-Service (and It Gets Worse)
27
Acute Discharges 2.7%
Total Discharges 3.0%
Acute Patient Days 2.3%
Total Patient Days 2.2%
Births 1.6%
Inpatient Surgeries 3.7%
Ambulatory Surgery Visits* 0.3%
Emergency Department Visits 0.6%
Inpatient Admissions from ED 2.4%
Observation Visits 6.0%
Home Health Visits 5.6%
All Other Outpatient Visits 3.1%
Total Outpatient Visits 2.1%
Sources: IHA DATABANK PROGRAM; *Ambulatory Surgery Visits (hospital based)
Hospital Trends: Jan-Oct ‘12 Compared to Jan-Oct ‘13 Mercy Trends
� Volumes down, but less than statewide
� Financial losses in providing care to Medicare patients increasing ($76 million loss in FY 14)
� Operating Margin Eroding
Iowa Utilization – Volume Trends
$30
$40
$50
$60
$70
$80
$90
$100
$11019
98
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$36.69CMS RVU CF: Down 7%
CF Adjusted for Inflation: Up 33%
CF indexed to Health Ins Premiums: Up 178%
$34.04
$51.40
$102.25
Not Sustainable for Physicians: Can’t Keep Doing More to Make Up for Declines in Ra tes
Two Key Points:1. Costs are driven more by volumes than by price per unit2. Physicians are earning LESS per unit of work toda y than in 1998
28
Physicians Leaving Independent Practice
29
Source:
Medical Group Management AssociationNote: Practices not owned by hospitals or physicians are owned by a variety of groups including the government, universities, and insurers.
“Late this decade, most, if not 85% to 90%, of all physicians will be integrated into some
type of system. The kind of practice of independent medicine we once knew is dead.”1
1 Changing Payment Methodologies Force Physicians Into Larger Groups. Managed Care Magazine. February 2011. 29
Growing Number of Physicians Declining to Accept Government-Sponsored Insurance
• About 1/3 nationally will not accept new Medicaid patients• Issue isn’t as serious in Medicare – about 5% – but is growing
• As you would expect, Iowa physicians are more accepting – but that doesn’t mean we’re immune to the issue
30
Source: Kaiser Family
Foundation Health News,
8-6-12
HEALTH REFORMHEALTH REFORMHEALTH REFORMHEALTH REFORM
ON TWO SLIDESON TWO SLIDESON TWO SLIDESON TWO SLIDES
Mercy
31
Health Reform Recap
INSURANCE REFORMS
� Creates Health Insurance Exchanges to facilitate access and manage subsidized purchases
� Regulates insurance plan coverage, premiums & expenditures (85% medical loss ratio)
� Eliminates pre-existing conditions exclusions, lifetime & annual limits for insurance plans
� Requires coverage for preventive care without co-pays
DELIVERY SYSTEM REFORMS
� Discourages utilization� Encourages integration
of physicians, hospitals & long-term care providers
� Increased linkage between performance (outcomes, cost) & payments / incentives
� Increases access to care for under-served
� Large portion of increased costs paid for through cuts in provider payments
� Increases alignment of coverage with evidence-based medicine (emphasis on primary care)
� Increases scrutiny – fraud & abuse, RACs
Two major changes – Delivery & FinancingCBO Projects $120 Billion in Savings Over 10 Years
Implementation Over a Decade: 5 Election Cycles & Global
Economic Changes
2010-2013
2014-2016
2017-2020
Rules, Regulations, New Funding & Payment Programs
Mandates, Pilots & Exchanges
New Era of Value, Convergence & Consumerism
32
1. Payment for Value – Shared Savings2. Insurance Exchanges – the Health Insurance
Marketplace (predicted 37% increase in individuals purchasing directly)
3. Growth in Retail Market – Move Away from Employer-Sponsored Insurance (predicted 28% decline in employer-sponsored small group coverage)
4. Rise of Narrow Networks5. Insurance Co-Ops6. Options for the Poor – Medicaid Expansion and
Commercial Subsidies (predicted 43% decline in uninsured, and 23% increase in Medicaid)
Post ACA: Six Specific Areas of Change
33
Value-Based Payment – Shared Savings Example
34
A Defined Population Spends a Total Amount of Money
In a Defined Time Period
It Spends Less Money in Total, Regardless of
WHERE
If in a Subsequent Time Period
The Population is Attributed to a
Provider Org., e.g. the
The Provider Org. Is Rewarded with a Portion of the Savings
THE TRANSITION TO THE TRANSITION TO THE TRANSITION TO THE TRANSITION TO
ACCOUNTABLE CAREACCOUNTABLE CAREACCOUNTABLE CAREACCOUNTABLE CARE
Mercy
35
36
MHN Strategic Priorities - Drive Transformation
• Clinically Integrated Network Development
• Care Management Models and Capabilities
• Retail and Organic Growth Strategies
• Population Health Analytics
• Ambulatory and Post-Acute Strategies
• MHN Clinical Service Lines
• Governance
• Physician Alignment Physician Practice Enterprise (CHIPS)
• Revenue Cycle
• Clinical and Process Excellence
• Finance Transformation
• IT Next Level
• Supply Chain
• Risk and Insurance Capability
• Employee Health Management
• Payer and Insurance Product Strategies
• Specific “go to market”Roadmaps
• Consumer and Employer Strategies
Clinical and Operational
Excellence
Clinical and Operational
ExcellenceIntegrated Care DeliveryIntegrated Care Delivery Payment for ValuePayment for Value
THE NEXT ERA OF HEALTHY COMMUNITIES
Clinical Transformation Market Transformation
MHN Staging of Product DeploymentMHN Staging of Product DeploymentMHN Staging of Product DeploymentMHN Staging of Product Deployment
Calendar Year 2013 2014 201720162015 2018
5
1
3
Launch Medicare Shared Savings program
Deploy Commercial risk contract with Wellmark
Partner with CoOPortunity on MHN-centric Individual & Small Group Exchange Products
6Re-contract existing MA fee schedule into risk arrangements
2 Move Mercy Employees into ACO
Future:
Commercial Large Group Product
Launch Mercy-centric Individual& Small Group Exchange Products
7Launch MHN/ UIHA-centric Medicare Advantage Product
Commercial
Medicare
Launch UIHA-centric Medicaid Product
8
37
Medicaid
4
Uniquely Prepared for the Transition to Value -Based Care
• 18 years ago, led by Dr. Swieskowski, began exploring better ways to care for patients with chronic disease
• 1st to put health coaches in primary care clinics• Won the “Acclaim Award” – the highest national award
for quality in a physician group practice• Cited by the Robert Wood Johnson foundation in 2013
as an “Exemplary Model of Workforce Efficiency & Innovation”
• As Medicare and other payers began exploring new payment systems in 2011 – rewarding value rather than volume – Mercy immediately said “yes”
• Proven ability to manage populations of patients to lower costs and improve health
• Platinum “Well Workplace Award”• Mercy ACO, a Limited Liability Corporation (LLC),
formed in February 2012• Contracts with most payers38
Knoxville
New Hampton
MMCWestLakes
WintersetGreenfield
Dallas County
Webster City Iowa Falls
Hampton
Osage
Cresco
BrittAlgonaEmmetsburgMason City
Knoxville
Centerville
New Hampton
MMCWestLakes
WintersetGreenfield
Dallas County
Webster City Iowa Falls
Hampton
Osage
Cresco
BrittAlgonaEmmetsburg
Oakland
Audubon
Mount Ayr
Leon Corydon
Bloomfield
Albia
BurgessDenison Manning
Primgahr
Hawarden
Grinnell
DubuqueDyersville
Clinton
Mercy ACO Participant Sites� 1,800+ Providers (Physicians & Mid-levels)� 120,000+ Lives in Value Based Agreements
– Will grow to greater than 200,000+ by Jan 2015– Greater than 100,000 MSSP lives by Jan 2015
MHN Urban Hospital
Owned CAH Hospital
Managed CAH Hospital
Managed Rural Hospital
Primary Care Clinic
Iowa City
� 94 Primary Care &
Specialty
Participant
Organizations
� Recently received
federal Innovation
Grant for $10.2
million over 3
years to support
expansion of
population health
management to
rural communities
Mercy ACO Care Delivery ApproachMercy ACO Care Delivery ApproachMercy ACO Care Delivery ApproachMercy ACO Care Delivery Approach
• Manage patients as populations and as individuals– Planned patient visits– Measure population based outcomes (ie. % with BP controlled)
• Use Information Technology– AEHR, Disease registries, Care management software
• Engage patients with Health Coaches• Coordinate care
– Communication and sharing information– Plan transitions (ie. Hospital to Primary Care, Hospital to SNF)
• Continually Improve Quality– Measurement , reporting and reduction in variation
• Ensure access to care – Denying needed care is NOT effective
• Develop models to be reimbursed for value, not just volume– P4P, Shared savings, Capitation
• Stratify Patients – Focus efforts where needed most40
Key: Know The Patient Populations &
Proactively Manage Their Health
Traditional Doctor’s Office:• My name, age,
insurance info• Vital signs &
basic lab values run today
• My health history if someone bothers to dig into my chart
Providers Managing Population Health:• Everything at left plus...• My chronic conditions /
health status• My compliance with
prescribed therapies and routine needs (flu shots, mammograms)
• My health goals• My personal goals• My social environment• My claims data
41
What My Doctor Knows
about Me
Nothing – unless I visit
Everything – regardless of when I last came in
Level of 15 Min./Year Regularly, as neededEngagement:
42
1%9%
20%
70%
29%
39%
21%
11%
Key: Stratification of Patients
Advanced Illnesses
Multiple Chronic Conditions
At Risk
Stable
$101,000
$ 15,000
$ 3,700
$ 580
National Sample of 21 Million Americans Between 200 3 and 2007
Source: Truven Health Analytics, Market Scan, 2012
Percent of Percent of Total Pe r PersonPopulation Health Care Expenses Cost
Mean Annual
10% of the Population Accounts for 68% of All Health Care Costs
Key: What We Do Outside the Traditional Health Care System
“Only 10–15 percent of an individual’s health status isattributable to the health care services he or she receives. The rest is driven by behavior, genetics and social determinants, including living conditions, access to food and education status.
“That means that the trillions of dollars the United States spends on health care services contributeto only one-tenth of the nation’s health .
“An individual’s behavior is, by far, the single most important contributor to his or her overall health.”
Source: “Connected Health and the Rise of the Patient-Consumer,” William H. Frist, Health Affairs, February 2014
43
MHN & UI Health Alliance Physician Leaders MHN & UI Health Alliance Physician Leaders MHN & UI Health Alliance Physician Leaders MHN & UI Health Alliance Physician Leaders
Developing Standardized Care ProtocolsDeveloping Standardized Care ProtocolsDeveloping Standardized Care ProtocolsDeveloping Standardized Care Protocols
Available to All Member OrgsAvailable to All Member OrgsAvailable to All Member OrgsAvailable to All Member Orgs
• Provide standards of treatment and ongoing management including:– Patient treatment– Referral activities– Quality measures– Care processes– Care management– Evidence-based drug recommendations
44
“Everyone has a plan until they get punched in the mouth.”
-- Mike Tyson
45
Then Again…Then Again…Then Again…Then Again…
Mercy ACO CMS Readmit RateMercy ACO CMS Readmit RateMercy ACO CMS Readmit RateMercy ACO CMS Readmit Rate12.5% ↓ all-cause re-admits
151.6
140.8
150.2
144.0
138.7
134.2
141.0139.2
137.0
134.0132.6
120.0
125.0
130.0
135.0
140.0
145.0
150.0
155.030 Day All Cause Readmissions Per
1K Discharges
CY13 Q1 claimsdata missing
2 weeks of run-out
7905.3
8113.9
8288.9 8288.88250.3
8008.0
8140.3
7949.4 7933.0
7000.0
7200.0
7400.0
7600.0
7800.0
8000.0
8200.0
8400.0
8600.0
BY09 BY10 BY11 CY12Q3 CY12Q4 CY13Q1 CY13Q2 CY13Q3 CY13Q4
Mercy ACO PMPYMercy ACO PMPYMercy ACO PMPYMercy ACO PMPY3.2% Savings Performance Year 1
CY13 Q1 claimsdata missing
2 weeks of run-out
Total Expenditures Per Medicare Beneficiary
47
Mercy ACO Producing Real Savings for Patients Mercy ACO Producing Real Savings for Patients Mercy ACO Producing Real Savings for Patients Mercy ACO Producing Real Savings for Patients and Payersand Payersand Payersand Payers
Contract Year: PY2 (2013)
Quality• 0.08 Overall VIS• 0.07 Shared Savings
VIS
Savings / Rewards
• ($7.99) PMPM • $3.7 M shared savings
and quality payments
Contract Year: PY1 (6/2012- 12/2013)
•12.5% ↓ hosp. re-admits•16.8% ↓ hospitalizations
• 3.2% Cost Savings • $9.7M * 50% = $4.4M
• 4.5 Star Plan
• 74.3% Medical Loss Ratio (Target = 85% or lower)
• $330K incentive
• 10.8% ↓ hosp. re-admits
• 16.1% ↓ ED Visits
• $533K incentive• $225K Mgmt. fee
48
Contract Year: PY1 (2013)
49Confidential and Proprietary © 2014 Sg249
ACOs Have Moved to the Mainstream
The Cost Curve is Bending
• Five years of historic low-growth
Source: Centers for Medicare & Medicaid Services (CMS), Office of the Actuary (OACT)
National Health Statistics Group.
Note: 2013 is a projection.
9.7%
8.6%
7.2%6.8% 6.5%
6.3%
4.7%
3.8% 3.8% 3.6% 3.7% 3.8%
0%
2%
4%
6%
8%
10%
12%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Annual Percent Change in National Health Expenditure Growth
New CBO Estimates - August 2014The changes are big. The difference between the current estimate for Medicare’s 2019 budget and
the estimate for the 2019 budget four years ago is about $95 billion.
New Data on Hospital Prices Show Trend Is Consistent with Recent Low Growth…Hospital price growth has decreased since 2009 to an annual rate of
0.9% (from December 2013 to June 2014)
Source: Dobson | DaVanzo analysis of Bureau of Labor Statistics data.
Note: Annual growth rates calculated from December to December of each year.*2014 growth rate
calculated from December 2013 to June 2014.
3.4%
2.2%2.5%
2.2%
1.5%0.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2009 2010 2011 2012 2013 2014*
Yea
r-O
ver-
Yea
r G
row
th
in H
ospi
tal P
rices
…and Contributing to Decelerating Growth in Hospital Spending Per Medicare BeneficiaryThe annual growth rate has decreased to nearly 0% s ince 2008
6.0%
3.5%
2.0%
0.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2008-2009 2009-2010 2010-2011 2011-2012
Source: MedPAC, 2009-2013. Assessing payment adequacy and updating payments: Hospital inpatient and outpatient services.
Annual Growth in Medicare Per Beneficiary Hospital Spending
Advances in Knowledge & Technology
Medical Advancements Racing Forward• Robotics• Genetics• Nanotechnology• Regeneration of tissue, organs,
limbs• Personal devices
– Continuous connectivity– Apps for monitoring, diagnosis,
managing health and even treatment– Implantable devices
• Virtual care / Remote interventions• New pharmaceuticals
54
CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION
55
“The move from volume to value is the right thing fo r our patients and therefore is the right thing for u s.”
-- Dr. David Swieskowski
56Confidential and Proprietary © 2014 Sg256
Health Systems Must Blend Traditional (Wholesale)
Strategy with the New Era (Retail) Strategy
Concluding Thoughts…Concluding Thoughts…Concluding Thoughts…Concluding Thoughts…
� Don’t pine for “good old days” that didn’t exist – the status quo was unsustainable
� Embrace risk – have a clear contracting strategy to get closer to the premium dollar
� Cannibalize your traditional business model – if you don’t do it to yourself, someone else is going to do it to you
� Develop or partner with those who have the essential new competencies
� Be part of something larger – skill and scale are keyAnd finally…� You CAN succeed in this new world� Most importantly, it’s an opportunity to marry your
economics with your Mission
57
QUESTIONS / DISCUSSIONQUESTIONS / DISCUSSIONQUESTIONS / DISCUSSIONQUESTIONS / DISCUSSION
58
59
What We Know, What We Don’t Know,
and What We Think We Know About the Affordable Care Act
Brad Wright, PhDOctober 31, 2014
A Review of the Literature
Pick One from Column A• The Impact of the ACA on…• What the ACA means for…• Early effects of the ACA on…• ACA Implementation and…
And One from Column B• Hospitals• State Medicaid Programs• Pharmacists• Mental Health Parity• Dentists• Primary Care Providers• [Insert Medical Specialty Here]
What I’m NOT Talking About
What Do Chickens and Healthcare Have in Common?
http://ps.oxfordjournals.org/content/early/2014/09/26/ps.2014-04291.abstract
• Individual mandate• Medicaid expansion• Subsidized private HIE• Preexisting condition ban• Employer mandate• And lots of other stuff
The Patient Protection and
Affordable Care Act
October 1, 2014 Policy Changes• Larger than expected DSH payment cuts
• Readmissions Penalty Program– Maximum penalty now 3%– COPD, knee & hip arthroplasty now included
• Value-Based Purchasing Program– Withhold increases to 1.5%– Now based on 4 domains
• Clinical process of care (20%)• Patient experience of care (30%)• Outcomes of care (30%)• Efficiency (20%) (new for FY 2015)
Mullin J. The big cuts coming for safety-net hospitals in the new fiscal year; Mullin J. What to know about readmission penalties in the new fiscal year; Mullin J. What to know about value-based penalties in the new fiscal year. The Advisory Board Company. October 1, 2014.
What Do Physicians and Free Clinic Patients Know About the ACA?
0
10
20
30
40
50
60
70
80
90
100
Individualmandate
Medicaidexpansion
Subsidies Preexistingcondition ban
Employermandate
Governmentinsurance
plans
% Patients
Physicians
National
Petrany SM, Christiansen M. Knowledge and perceptions of the Affordable Care Act by uninsured patients at a free clinic. Journal of Health Care for the Poor and Underserved, 25(2): 675-82; Rocke DJ, et al. Physician knowledge of and attitudes toward the Patient Protection and Affordable Care Act, 150(2): 229-34.
• Insurance gaps
– States not expanding Medicaid
– Opt to pay penalty
– Undocumented immigrants
– Narrow networks
• Supply-side barriers
– Adequate workforce
– Willing-providers
• Non-financial barriers
There Are Also Gaps In The ACA
• 23 – 31 million remain uninsured– 20 – 33% are undocumented immigrants
• Physicians exiting Medicaid/Medicare market– 9% will stop taking new patients
– 2% will stop taking current patients
– 29% remain undecided
• Even harder to quantify– Churning between coverage
– Non-financial barriers to care
How Big Are the Gaps?
Congressional Budget Office and others; MedScape Physician Compensation Report 2013.
If We Expand Coverage…
• More people seek care• Workforce shortages• Waitlists• Rationing• Socialized Medicine• Death Panels
Take a Deep Breath
• Evidence from MA provides hope
• Other New England states for controls
• Medicare patients w/ chronic disease:– No decrease in visits to doctor pre/post reform– No decrease in quality process measures– Slight increase in health care costs
• Limitations– MA had low uninsured rate pre-reform– Only looks at 65+ Medicare beneficiaries
Joynt K, et al. The impact of Massachusetts health care reform on access, quality, and costs of care for the already-insured. Health Services Research. 2014. doi: 10.1111/1475-6773.12228
Young Adult Provision• What We Know
– Increased coverage among 19 – 25 year olds– Largest percentage point increases for:
• Men (+ 9.7)• Unmarried (+ 8.1)• Blacks (+ 11.3)• Unemployed (+ 9.1)
• What We Don’t Know– Is it having any impact on their health?
• What We Think We Know– Seem more likely to have usual source of care– Less likely to delay care because of cost
Sommers BD, et al. The Affordable Care Act Has Led To Significant Gains In Health Insurance And Access to Care for Young Adults. Health Affairs 32(1): 165-74.
National Context: 28 Medicaid Expansion States
Medicaid Expansion
• What We Know– 28 states + DC expanding– 6 via waver (including Iowa)– Politically driven and red states need most help
• What We Don’t Know– If and when remaining states will participate
• What We Think We Know– Medicaid coverage provides peace of mind, but doesn’t
improve health outcomes
Baicker K, et al. The Oregon experiment—effects of Medicaid on clinical outcomes. New England Journal of Medicine. 2013;368:1713-22.
New Coverage Under the ACA
1
8
5 6
20
0
5
10
15
20
25
Young Adults Marketplace Direct fromInsurer
Medicaid/CHIP Total
(in m
illio
ns)
Blumenthal D, Collins SR. Health care coverage under the Affordable Care Act—a progress report. New England Journal of Medicine. 371(3):275-81.
Insurance Marketplace (Non-Medicaid)
29,163Individuals Enrolled in a
Marketplace Plan (April 2014)
Iowa Fast Facts: Provides coverage options for individuals 138 percent FPL +Premium assistance tax credits available based on incomeCoventry, CoOportunity, are statewide coverage providersAvera and Gunderson are regional coverage providersProviders paid negotiated/commercial rates
Iowa Coverage Impact
Medicaid Expansion:
108,014
InsuranceMarketplace:
29,163
Total ACA
Impact: 137,150
http://yarmuth.house.gov/press/uninsured-rates-drop-in-every-kentucky-county-under-the-affordable-care-act/
Financial Protection of Medicaid Expansion
45%
5%
34%
4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Spend >10% ofIncome on HealthCare Without ACA
Spend >10% ofIncome on HealthCare With ACA
Spend >20% ofIncome on HealthCare Without ACA
Spend >20% ofIncome on HealthCare With ACA
% o
f Med
icai
d-E
ligib
le P
opul
atio
n
RAND Brief. Will the Affordable Care Act make health care more affordable? RB-9734-CMF, 2013
Uninsured
Medicaid
Early Trends in Iowa Hospitals Medicaid and Self-Pay Utilization/Charges
January-April, 2014 vs. January-April, 2013
Are We Further Defining Two Americas?
America’s Health Rankings Medicaid Expansion
http://www.americashealthrankings.org/reports/annual http://kff.org/health-reform/slide/current-status-of-the-medicaid-expansion-decision/
Health Insurance Exchanges
• What We Know– At least 8 million people have enrolled– 2014 premiums 16% lower than CBO projection– More insurers are joining exchanges in year 2
• What We Don’t Know– What will happen in next open enrollment?– Will employers drop coverage?
• What We Think We Know– Another 17 million will enroll by 2017– State/federal gov’t may address issue of narrow networks
Diamond D. In every state so far, more insurers are asking to participate in Obamacare. The Advisory Board Company. June 12, 2014; Blumenthal D, Collins SR. Health care coverage under the Affordable Care Act—a progress report. New England Journal of Medicine. 371(3):275-81.
Financial Protection of Health Insurance Marketplace
63%
31%
17%
3%0%
10%
20%
30%
40%
50%
60%
70%
Spend >10% ofIncome on HealthCare Without ACA
Spend >10% ofIncome on HealthCare With ACA
Spend >20% ofIncome on HealthCare Without ACA
Spend >20% ofIncome on HealthCare With ACA
% o
f 138
-40
0% F
PL
Pop
ulat
ion
RAND Brief. Will the Affordable Care Act make health care more affordable? RB-9734-CMF, 2013
Individual market pre-ACA
Individual marketplace plan
Emergency Departments As Sentinels
• What We Know– ED use didn’t increase disproportionately in MA– ED use did increase disproportionately in OR
• What We Don’t Know– What will happen nationally?– What role will ED play in ACOs?
• What We Think We Know– If workforce can’t meet demand or access isn’t convenient,
inappropriate ED use will increase– EDs more profitable under ACA (profit margin 11.7% vs. 7.3%)
McClelland M, et al. The Affordable Care Act and emergency care. American Journal of Public Health. 104(10): e8-e10; Wilson M, Cutler D. Emergency department profits are likely to continue as the Affordable Care Act expands coverage. Health Affairs. 33(5): 792-9.
There Will Be Answers
